The importance of tight alignment across Value Proposition, Product and Brand Identity

Introduction:

I started my career working for some of the biggest and most loved European consumer brands (Orange & PaddyPower specifically). Both brands had a maniacal focus on having a clear position in the market that came through in all aspects of their product and brand… and they both exploded their market share off the back of it.

Orange entered a telecoms industry that was struggling to shake off it’s B2B heritage. The industry was over complicated with a technology based message and confusing price plans. Orange flipped this approach on it’s head, they understood to win in the consumer space they needed a much more simple product, and emotional brand message.  They focused on their message on how they improved relationships between people not on the technology… they didn’t put an actual telephone in one of their ads for the first 10 years of their existence.

PaddyPower entered a stodgy gambling market where the big bad booky was trying to beat the punter. PaddyPower launched with a much more customer focused brand position. They wanted to make it fair. For example, if your team lost in the last minute in freak circumstances, PaddyPower would give you your bet back. Stewart Kenny, one of the founders, famously quipped “You bet $10, you get back $9… the $1 is the cost of the fun of the bet”.

More recently I’ve realised that the focus on having a clear value proposition that’s aligned with your product and brand identity is often lacking. Companies and marketing teams are becoming much more technology focused (with good reason) and I fear this has left a skill gap in understanding these important concepts.

The below piece is my attempt to give some basic direction on how fast growth technology companies can scale without losing focus on these important aspects of marketing. These are not new concepts but I’m hoping that by reading how I think about them, you get a new appreciation for them. If all it serves is to remind you to focus on this stuff, then that’s a win for me. So here we go...

 

The importance of consistency in forming great relationships

 

Consumers want to have relationships with companies much like they have relationships with people. The best relationships are built on consistency… consistency across three key things:

  1. Values: at my core do I stand for something?

  2. Decisions & Actions: do my decisions and actions align with my core values? Is this alignment clear and transparent?

  3. Outward Behaviour: are my behaviours also consistent and do they give you insight into the type of person I am? Do I smile when you see me and do I show an open stance? Or am I forthright and more direct?

 

People who have consistency across these 3 things are great leaders. They are people we want to be around.

 

Obama v Clinton

Consider Obama and Clinton.

Obama had a clear set of values, he backed them up with his decisions, actions and outward behavior. He was caring, fair, believed in hope, “Yes We Can”.

Clinton however (mainly driven by the media) was less clear. Her core values seemed to lack the same clarity as Obama, her actions on her emails seemed to question her position as someone the masses could trust, and her behaviour often came across as forced based on her assumption that she needed to look ‘warmer’.

I believe that Clinton would have made an excellent president, but I think she lost the election based on an inability to consistently communicate and portray her core values.

 

Implications for Companies

Sometimes it doesn’t matter how good a president you would actually be (how good a product you have), if people can’t clearly understand the alignment between your values, actions and behaviour they won’t buy into you. This has direct implications for businesses trying to grow their market share.

People want relationships with Companies just like they do their politicians. This means that great companies must have a similar alignment:

  1. Value Proposition: what is the core value you provide above your competition to your defined target market? Who is your exact customer you are targeting? What do they want? As a result... Do you compete primarily on price? On product performance? On simplicity? On innovative, beautiful design? You need to stand for something. And whatever you stand for must resonate with your identified target market.

  2. Product: when you think about the job your product is hired for, is your value proposition at the baked through the solution you design? Much has been written about designing products based on the job they’re hired for. You’ve likely heard of the milkshake example. Well it’s important that as you look to get hired for more jobs, you keep a core value proposition at the heart of your product strategy. If WholeFoods attempted to solve the milkshake problem they would have taken a healthy twist to it.

  3. Brand Identity: when customers interact with your brand is your value proposition clear? If you compete on beautiful design you better make sure every marketing communication is beautifully designed. If you are competing on price, does this low cost focus come across in all your marketing? Does the brand personality you portray make sense based on your value proposition?

 

 

Some examples of this thinking in the wild

The Good - Squarespace

  1. Value Proposition: Squarespace are clear in their drive for beautiful design, simplicity of use, and powerful performance. They target creative individuals who want to promote and sell their wares online.

  2. Product: their product is designed with these attributes at its core. The templates you can use are award winning designs, their drag and drop user interface is extremely easy to use and their integrations make it a powerful ecommerce platform. It’s clear that they maniacally focus their product development roadmap around these three core tenets.

  3. Brand Identity: Squarespace believe that their mission is to help small businesses and creatives achieve their dreams, that’s why their product is at the same time simple to use, beautiful but still powerful… their brand identity clearly communicates this vision. Their instagram is simply beautifully taken photographs of small business owners working to achieve their dreams.

The Good - Ryanair

  1. Value Proposition: Ryanair have a pretty straightforward value proposition around cost. They compete on price.

  2. Product: Price is at the very centre of Ryanair’s product. They cut costs at every part of the process. They are open and blunt about it. They even threatened to charge for use of the toilets on board.

  3. Brand Identity: Ryanair realized that by offering cheap flights they were opening up air travel to a whole new market segment that was once shunned by the elitist air travel industry. Their brand identity is therefore challenging of the establishment with the low cost message at the centre.

 

The Good - Intercom

  1. Value Proposition: Intercom are up front in their focus on simplicity, personal interactions and fun.

  2. Product: Their product is very clean, and simple to use. They’ve recently launched a new integrations product to allow integrating intercom with other ecommerce services even easier… and all their products are based on improving personal connections between businesses and customers.

  3. Brand Identity: The brand is clean, with a fun tone of voice. Even the emails they send to promote their content come from the writers themselves rather than ‘marketing’ as is typical in B2B.

 

The Bad - Microsoft

  1. Value Proposition: It’s unclear what Microsoft’s core value proposition is. They are caught between competing on price as the operating system for low cost PCs, but also on design and performance with their own brand devices like the Surface.

  2. Product: Due to the lack of a clear value proposition their product strategy is similarly lacking focus. They are playing in utility software (windows) , high performance devices (the Surface), and even gaming (Xbox). It’s scattered. Compare this to Apple who have a really clear vision around beautifully designed innovation.

  3. Brand Identity: I honestly could not tell you what Microsoft’s brand identity is. It has no personality, no tone of voice. No clear brand marks that stand out like the iconic apple logo. This also stems from a lack of clarity on value proposition. If you don’t know what you stand for it’s difficult to bring it to life in your brand.

 

3 Reasons Companies get this stuff wrong

 

#1 Poor definition of Value Proposition & Feature Focus

The first reason is pretty obvious but many companies fail to get market traction due to poor definition of their Value Proposition. They enter a market with a unique set of product features that, for a short time, make their product the best at the job it’s being hired for (to a segment of the market at least). But they don’t realise what got them traction in the first place. Competitors will quickly close the feature gap and now they’re in a war of features. Each company trying to compete to beat the other on a feature by feature basis. Trying to win based on incrementally improving on a wide range of product features is not a long term nor defensible strategy. It reminds me of that episode from The Simpsons where Homer designs a car feature by feature only to end up with a frankenstein outcome.

What is a defensible strategy is choosing one, two, three, core things you want to win on, and you focus on developing features with that in mind. You are then happy to lose ground on certain aspects of the product while you develop a defensible position in the market.

This lack of clarity on value proposition also means that your marketing team have no core values from which to build a brand identity. Ryanair’s brand identity is so distinct exactly because they knew who their target customer was and were maniacally focused on their low cost value proposition. They built a brand identity that brought this value proposition to life through their brand.

 

#2 The First Mover Disadvantage

The common wisdom is that being first into a market is an advantage… I would argue that often it’s a long term disadvantage. Why?

When a company develops an innovative product, creating a new category, generally they offer a pretty generic product designed to capture as much of the market need as possible. When Ford launched the Model T he famously said “Any customer can have a car painted any colour that he wants so long as it is black”.

 

The problem for dear Henry is that this opens up a market opportunity for competitors to target a more niche segment of the market with a more focused value proposition. For example what if Buick launched a blue car for those who love blue. Well actually this is a case of ‘Feature Focus’ but you get my point...

The car industry today has gone through a transformation with multiple brands offering different value propositions targeting specific customer segments. This has left car companies like Ford and GM, who have a bland mass market value proposition, in a very challenging place. Their market share has halved over recent decades. This is a classic example of the First Mover Disadvantage. They are being beaten by companies with more focused value propositions like BMW (performance).

 

#3 Brand Stretch

In order to grow new revenue streams companies look to new product development. While this is obviously an effective growth strategy, done badly it can undermine the value proposition and brand identity that made them successful in the first place.

It’s critical that as companies launch new products under the same brand that they keep strong alignment between their original value proposition and the new product.

 

If Ryanair launched a taxi service it should be low cost.

If Apple launch a TV it must be beautifully designed and be innovative in some way (e.g. around content). I’m confident the reason we are yet to see an Apple TV is because they don’t feel they can bring innovation to the category… yet.

If Squarespace launched an email marketing platform it would be simple to use, beautifully designed and powerful.

 

The brand graveyard is littered with examples of companies getting this wrong. They launch a new product under their existing brand that doesn’t properly align with their original value proposition leading to misalignment in product and value proposition and ultimately a brand identity that lands flat with no meaning.


 

Brand Stretch Case Study: Lebara “Pay Monthly”

I actually fell foul of this one myself when I headed up new proposition development for Lebara mobile back in 2010. Lebara mobile had built a large UK business offering low cost international mobile calls and texts. They sold sim cards to immigrants in local communities (e.g. sold sim cards in African markets in London). They wanted to use the technology they had built to target a new market segment (the professional first generation immigrant). We realised that this target market had some specific needs that the current product didn’t meet e.g.:

  1. They wanted to pay at the end of each month rather than using prepaid top ups like Lebara’s original product.

  2. They needed data services to access the internet as part of their price plan.

  3. They bought their telecoms services in high street retailers like “Phones 4 U” not in street markets.

We built this product and distribution channels, however what we failed to realise is that the Lebara brand was so strong as a cheap top up based sim card, the more professional market simply wouldn’t buy it. We failed to realise that the Lebara brand couldn’t stretch into this market without a significant amount of investment in re-positioning the brand. While we managed to get some traction through brute force sales and marketing, the product ultimately never reached the heights it should have.

 

Brand Stretch Case Study: Procter & Gamble

Procter & Gamble historically had been a holding company that hid from the limelight barely attaching its name to its products (e.g. Tide, Pantene etc). They decided however that there was power in bringing the brand to the forefront and positioning around creating products that “make Mom’s lives a little easier”. In order to do this they realised that all the sub brands within the P&G portfolio would need to align with this proposition. The brands had to care for the family. One product that didn’t align to this overarching value proposition was “Pringles”. It was an unhealthy, addictive snack that didn’t make mother’s lives any easier. There was a serious risk of brand stretch if they launched the campaign with Pringles in their product portfolio.

In February 2012 P&G sold Pringles to Kellogs.

In April 2012 P&G launched their Mother’s campaign.
 

 

Navigating the pitfalls

Like it or not, it’s highly likely that most companies will find themselves in one of two positions… both of which will drive a decision to invest in product development:

  1. Trying to protect revenues in an existing market - First Mover Disadvantage:

    1. In a bid to protect revenue from new market entrants in their current market they look at launching new products that better serve the new demands of an evolving customer segment demands

    2. E.g. Toyota launched Lexus to target a more luxury market

  2. Trying to grow revenue by entering new markets - Brand Stretch:

    1. On the flip side of the coin companies will look for new revenue streams by entering new markets through product development thus risking brand stretch

Whether you are a company seeking to protect revenue or build new revenue streams you are likely to look to product development to grow revenues. So how do you ensure tight alignment as you do this?

 

Mapping your product roadmap across the Brand Architecture Matrix

Obviously the first step to make all of this work is in defining a clear and differentiated value proposition that resonates with a segment of the market. Assuming you have this, how do you expand your product portfolio without risking brand stretch?

 

Effectively you have a range of brand architecture strategies that start with your master brand name at the forefront and then it moves into the background as you move into new product areas. I must apologise for the names given to these categories… they are very similar and even I sometimes get mixed up… I didn’t name them!

So how do you decide which approach to apply as you grow your product portfolio?

Below I’ve outlined a matrix you can use when considering how new products fit within your brand architecture.

 

Dimension #1: assuming the core value proposition remains the same, are the products you are developing solving the same or different problems?

  1. Product Feature:

    1. The new “product” you’ve developed is actually just improving the performance of your product within the existing job it’s being hired to solve

    2. At the same time you are applying the same core value proposition

    3. This is a product feature that sits within your existing brand

    4. When Sony launched their portable CD player they wisely realised that this was actually solving the exact same problem for their customer as the original portable casette tape player. They therefore kept the “Sony Walkman” brand. The fact that you could now play a CD player was a product feature not a new product or brand.

  2. Branded House:

    1. If however the product you’ve developed is solving a similar but different problem, you start moving to a “Branded House” structure

    2. Adobe have the overarching “Creative Cloud” brand which houses Photoshop, Illustrator, LightRoom etc. These products all sit within a similar product set but are designed with a similar value proposition at their core.

  3. House of Sub Brands:

    1. As the products under a brand start to diverge past a point where you are targeting a similar problem you move into “House of Sub Brands” territory

    2. Adobe have “Creative Cloud”, “Marketing Cloud” and “Document Cloud” brands which all sit under the Adobe brand name

    3. Virgin apply their same customer centric value proposition to all their products in as diverse areas as telecoms and air travel.

Dimension #2: are you maintaining your core value proposition or changing it

  1. Endorser House of Brands

    1. This is utilised when you have a relatively broad value proposition that is being applied to a wide range of products

    2. The P&G Mother example above is a good one

    3. P&G have a pretty broad value proposition being applied to products across consumer packaged goods. The P&G brand is loosely connected to those brands to give them a hailo of being connected to a bigger brand with a bigger purpose

  2. House of Brands

    1. Some companies have a range of brands all of which have different value propositions and serve a different product need

    2. This is where the “House of Brands” comes in

    3. In this category the corporate brand is hidden in the background

    4. This is critical to ensure that there is not a misalignment of value propositions across the range of brands

    5. Why would a company do this? Well often companies will have a core competence that they can apply to a broad range of markets. Unilever have strong ties into distribution channels and manufacturing… they want to milk these core competences in as many market segments as they can and so don’t want to restrict themselves to one market segment.

    6. As mentioned above, P&G started with this strategy but as they pushed the P&G brand to the fore they realised they had to transition to a ‘Endorser House of Brands’ approach and sell brands that didn’t align with the P&G value proposition.

 

Conclusion

As I mentioned at the outset, these are not groundbreaking concepts but they are often forgotten or not enough attention is paid to them. This is something that should be constantly discussed within your leadership team. There is a massive risk that, even though you understand the concepts, you take your eye off them and end up in a situation where you lose focus on your value proposition or end up in a brand stretch situation.

When you get back to your desk ask yourself the following questions:

  1. Is everyone in my company really clear what our core value proposition is? Can they articulate it?

  2. Is our product roadmap hyper focused on improving our performance within the constraints of the job it’s being hired to do and our core value proposition?

  3. If we have multiple products does our brand architecture make sense? Is there a risk of brand stretch?

This is an extremely broad topic and so would love to continue the conversation with you on it. You can get me on twitter @shanemurfy.